Energy Department Defends Fisker Loans

Henrik Fisker, founder and former executive chairman of Fisker Automotive is sworn in before the Economic Growth, Job Creation, and Regulatory Affairs Subcommittee during a hearing on Capitol Hill.

WASHINGTON—The Department of Energy defended its loans to troubled car maker Fisker Automotive Inc. on Wednesday, pushing back against criticism from Republicans who said the money should never have been given.

Nicholas Whitcombe, an Energy official who had directed the vehicle loan program that backed Fisker, told the House Oversight and Government Reform Committee that Congress acknowledged “inherent risks” when it created the program in 2007. He said lawmakers set aside billions of dollars to cover loan losses, and the program as a whole “has played a critical role in the development of advanced technology vehicles.”

The House panel on Wednesday was reviewing the department’s initial decision in September 2009 to make the loan to Fisker.

The Wall Street Journal reported that the department had pushed the company to apply for a larger loan than it originally requested. A Fisker investor told the Journal that the department asked the company to move up its production timeline for a second, smaller car, and to make that car in the U.S.

Mr. Whitcombe said Fisker’s original application wouldn’t have qualified as a matter of policy because the company then wasn’t planning U.S. production, a requirement for receiving a loan. Fisker later asked for loans to support production of two cars, one in the U.S.

Bernhard Koehler, Fisker’s chief executive for Europe and the Middle East, said the company’s decision to seek a larger loan didn’t hamper its business. “We went through the due diligence” for the DOE while simultaneously raising funds for Fisker’s first vehicle, the Karma, Mr. Koehler said.

Henrik Fisker, the company’s co-founder who is no longer with the company, said that John Mizroch, an Energy official in President George W. Bush’s administration, approached him at a California conference in 2008 and suggested the company apply for a U.S. loan.